academic contributions to financial theory

Academic contributions to financial theory enhance our understanding of how financial markets operate, investment strategies, and risk management. Scholars have developed models to assess market behavior and asset pricing, such as the Efficient Market Hypothesis, which suggests that stock prices reflect all available information. They also explore behavioral finance, examining how psychological factors influence investor decisions. Additionally, the Capital Asset Pricing Model (CAPM) establishes a framework for evaluating expected returns based on risk. Collectively, these theories provide essential tools for investors, policymakers, and businesses to make informed financial decisions.